Tuesday, January 27, 2015

The Real Estate Investment Trusts (REITs) in Singapore has come a long way since its inception in early 2002. Since then, REIT listings on the SGX has continued to grow, reaching a total of 34 listings by the end of 2014. With a market capitalization of more than US$65 billion, it has indeed become one of the most popular instrument for people interested in property investments.

Vivocity Lifestyle Mall

I had the opportunity to have dinner at the iconic Vivocity Mall at Harbour Front on a Saturday evening. Boasting a lovely skypark, a huge array of retail stores and a monorail service to Sentosa, Vivocity is indeed one of the premier malls in the south of Singapore. It was therefore no surprise that the mall was packed with people !

The popularity of the mall lead me to think about how successful Retail REITs have become in Singapore, in particular the Mapletree Commercial Trust (SGX: N2IU), which is the trustee for Vivocity.

As such, i was inspired to write about the topic on investing in REITs and why we should indirectly participate in the success of these properties.

Diversification

REITs typically own a few properties under their portfolio. For example: SPH REIT (SGX: SK6U) owns the Paragon and Clementi Mall. Paragon's main tenant pool consists of luxury brands, premier retail outlets and medical specialist clinics. Catering mainly for the luxury retailers and high-end healthcare users. However, Clementi Mall's tenant pool is like any typical suburban, family mall. As you can see, each of the properties under SPH REIT is clearly diversified and caters to different groups of the population. In addition, you can diversify further by selecting REITs based on the type of properties or geographical region you want to invest in. (Examples: Retail, Hospitality, Healthcare, Logistics, Industrial, Residential)

Affordability

Private investors are able to afford ownership of properties without having to fork out millions of dollars to buy a physical property. As a REIT investor, you will not need to break the bank to own a piece of your favourite shopping mall. For example, units of Mapletree Commercial Trust (SGX: N2IU) closed at S$1.545 on the 26JAN15. A single lot* can be purchased for just $154.50. In comparison, buying the whole of Vivocity (a 205,000 sqf mall) will likely go into the millions.

* 100 Shares Per Lot

Liquidity

REITs are listed on the stock exchange (SGX) and you can trade a REIT during the trading hours (9AM to 5PM) with a simple click of a button. Indeed, with the online web portals and mobile applications, it is easier to buy and sell a REIT than to buy and sell physical properties. All you will need is to open an account with any of the local brokerage firms (Example: Philips - Poems, DBS Vickers or UOB Kayhian).

Distribution

REITs are required to distribute at least 90% of their NET Income after tax as dividends. Being a shareholder of a REIT gives you partial ownership to all the real estate that it owns, and the dividend distribution which typically happens every quarter.

For instance, Soilbuild Business Space REIT (SGX:SV3U) reported its earnings on 21JAN15. The REIT closed its fiscal year by reporting a total of 6.193 cents in distribution for the full financial year. Its distribution for the 3 months to 31DEC14 is at 1.585, it would represent a distribution yield of approximately 7.8% (at the closing price of $0.805).

Summary

As a unit holder of a REIT, you share the benefits and risks associated in owning a portfolio of property assets, which typically distribute income at regular intervals. This income is derived from the rental revenues obtained from contractually-binding lease agreements between the trust and its tenants. Whilst REITs are a great source of passive income, just like any other investment,it is also important to understand the structures, risks involved as well as the underlying properties that are managed by the REITs before investing!See also: How To Earn Passive Income

Tuesday, January 20, 2015

I was looking out for some simple take aways along Marina Bay Link Mall to settle my lunch and chanced upon this newly opened joint. It sits inconspicuously beside the more established "Baguette - Viet Deli". Yet, there was a snaking queue formed just outside at around 12:15PM.

Fusion Kitchen

At first glance, it looked just like any other take-away food joint in Raffles Place. "Bah...Another salad place !" i thought to myself. On closer scrutiny of the menu, i was attracted by the concept of a Korean fusion meal and decided to give it a try. As they say in Singapore; Anything that has a queue, has to be good - And boy was i right !

The ordering system is pretty straight forward. Pick a main, choose a proteinand decide if you want to add an egg (Scrambled or Ramen Style) for 50 cents.They had 3 options for their mains:

I ordered the Rice Bowl (Kimchi Rice) with Crackling Pork Belly. Whilst most office workers around this area tend to prefer eating cheap lunches, at 8$, the portion of pork belly was indeed generous.

Beautiful Pork Belly Rice Bowl

The Kimchi rice bowl tasted as delicious as it looked! If you are someone who loves korean food and grilled meats, you simply have to try this place! The kimchi (preserved cabbage) was not overly fermented and did not have the tartness associated with normal korean kimchi. The best part of the dish was the succulent pork belly (with its crispy skin)! It was a delight trying to fish out the bits of crispy skin in my rice.Somehow all the ingredients just seem to blend harmoniously together creating a complex flavor and texture with each bite. The slight spiciness from the kimchi and paste gives it an added kick without overwhelming your taste buds.

I believe that the owners of this joint has nailed it with the fusion formula!Needless to say, i will be back to try the other options and hopefully add on to this review !!

Recommendations:

Rice Bowl (kimchi rice) with Crackling Pork BellyAsk for a mix of cilantro rice and kimchi rice to enjoy the best of both worlds!

Saturday, January 17, 2015

1. Start Young

When it comes to investing, i cannot stress the importance of starting young. With time on your side, the tolerance for risk is generally more acceptable. Unfortunately, many Singaporeans tend to do the exact opposite. During the latter years of their lives, instead of adopting a lower risk profile, many people are investing heavily into the stock markets or into investment products that are riskier. Instead of making up for lost time, some people make hasty mistakes and lose a good portion of the money which was meant for retirement!

The simple fact is that if you start saving early, you will likely be able to save more and even reinvest your gains for further income (link). If you dream to have a million dollars by retirement, you're much more likely to reach that goal if you have been consistently adding to your investment over 20 years as compared to a period of 5 years.

2. Lower Lot Sizes

Come January 19th 2015, SGX will be implementing lot sizes of 100. What this means is that investors would be able to buy shares of a company from as little as 100 shares (per lot). The consequence would be that large capitalized companies would now be more 'affordable' to the investors on the street.

With the new rules, the average investor can now afford to buy shares in Blue-Chip stocks like UOB or DBS with as little as 3000$.
For Example: Investing in one lot of UOB shares would have cost you about $23,000 (United Overseas Bank Ltd (U11.SI) - 16th JAN). From Jan 19th, with a minimum lot size of 100, you could easily invest in UOB with as little as $2,300. This allows you to accumulate a variety of stocks in your portfolio, which was previously unaffordable.

3. Costs Of Living (Inflation)

Starting a family is one of the major decisions that young adults like myself would have to face. The costs of living related to future expenses such as baby products, childcare and university education can seriously impair your retirement plans.
Whilst i won't go into the details regarding the costs to raise a child (Here is an interesting article by MoneySmart for reference). Raising a child in Singapore is by no means an easy feat. If we were to include the costs of tuition and extra-curricular activities such as piano lessons, the costs can easily balloon upwards of 300,000$.Just imagine these costs increasing based on the average 2-3% inflation rate in Singapore each year. Without a proper investment portfolio or financial planning, our savings will simply be eroded!

Summary

The benefits of starting to save and invest early are simply astounding. Having time on your side and investing your savings in a smart manner is the basic recipe for financial success.

By investing, you are essentially putting the spare cash to work. Whether you invest in Stocks, Bonds, Real Estate Investment Trusts, or any combination thereof, the objective is the same: to make investments that will generate more cash for you in the future.

Whether your goal is to send your children to university or to retire in the Bahamas (or Bali), investing early is essential to achieving your financial objectives.

Wednesday, January 07, 2015

Taobao Independent Freight Forwarding businesses have been sprouting all over the local scene during the past 3 years. With the increasing popularity of online shopping from Taobao, it is no wonder that as a consumer, we are often spoiled for choices. In fact, if you are like me, you would be more confused when trying to pick the right best freight forwarder!

Thus, I wanted to put together a guide to share some of my experience with an independent freight forwarder called Peeka (peeka.sg) - specifically the Ship4U service. Ship4U is the sea freight, shipping service of Peeka. Essentially, you will be given a unique address to consolidate your Taobao purchases. After all your purchases are received at the warehouse, you must declare its value, consolidate and pay for the shipping. According to their website, it takes approximately 2 weeks for shipping.The main advantage of shipping, boils down to costs. Air freight for large and bulky items would usually cost a bomb. Although the down side of shipping is the delivery time taken from warehouse to your door-step. If you are willing to wait, sea freight is the way to go.This guide assumes that you have created a Peeka account. Click (peeka.sg) if you have not already done so.Note: Peeka has since moved to a new website (peeka.com.sg)

1) Add Your Unique PRC Address to Taobao

When you create a Peeka account, you will be given a PRC address. This address is unique to your account. It will also be the address that you need to setup in Taobao.

Your Own Address At PEEKA

Proceed to add this address to your Taobao account. In Taobao, Access "收货地址" to add an address. Fill in the details in the drop down list.

- 广东

- 深圳

- 宝安

- 新安

When correctly filled, it will automatically populate and display the map at the right side of your screen.

Input (copy & paste) the remaining portion of your address and name. (Be careful not to get this wrong, as this information is critical for packages to arrive correctly to the Peeka warehouse).

How To Add the PEEKA Address in Taobao

2) Proceed to Purchase

Proceed to buy from Taobao. When checking out, remember to select the "New" address that you had created in Step 1. This is important as it will instruct the seller to send your purchases to the PEEKA warehouse in China that was uniquely allocated to you.

3) Package Declaration

When the Taobao seller has shipped your purchases, take note of the Delivery Tracking Number and add the package into PEEKA. This process informs PEEKA to expect a package with the specified waybill number. I guess the premise here is to avoid administrative lapses at the warehouse end.

Once the individual packages that are expected at your warehouse have been added and declared, wait for the items to arrive.

Declare Your Purchases

4) Package Arrival at PEEKA

When your individual package arrives at PEEKA warehouse, you will be notified via email. You can proceed to consolidate your packages or wait till everything has arrived.

Email Notification

5) Consolidate and Pay

Once all your packages have arrived at PEEKA, you can proceed consolidate the order and pay. Do note that storage is free for 10 days. After which, there will be a storage charge levied on each package on a daily basis.

Consolidate Your Purchases

Check the items that you would like to consolidate and click "Ship Selected".

When payment is completed, you will be given an order number and PEEKA will proceed to pack your items and send the package via sea freight.

*Do note that for PEEKA SHIP4U, you will incur 7% GST on your total declared value, regardless of whether the amount exceeds 400SGD$.

6) Delivery

When your packages finally arrive in Singapore, PEEKA will have them delivered to your home address. (This is also the address that was specified during check-out in point 5).

* Added:The delivery was arranged 1 day after the packages arrived in Singapore. To my surprise, the delivery man arrived around 9pm. I felt it was a nice touch, as it meant someone was at home to receive the goods.

Pros: - Pretty straight forward interface- Timely Email notifications- Costs include local (SG) delivery to your doorstepCons:- GST (7%) costs is included - regardless of whether your total declared value is less than 400SGD- Freight Rates are not very much cheaper than other forwarders like 65Daigou

- No checking or re-packing of goods

I am also looking to do a review on another independent freight forwarder called 65Daigou. Meanwhile, do check out my other guide on the integrated Taobao Forwarder, 4PX (Popstation) here.

Saturday, January 03, 2015

Saving money is easier said than done. Especially in the context that we live in, here in Singapore. The cost of living in the past 5-10 years have literally shot through the roof. I personally witnessed the price of my daily cup of coffee rising from ninety cents in 2009 to a dollar forty in 2014.
Such an environment creates a real challenge to saving and this is evident in young adults and working professionals, like myself. Thus, i wanted to share some little steps you can take to help you on your own journey, the journey to retirement and better financial life.

1) Separate Your "Expense" Account

Most people spend and save from the same account. Whilst this may seem perfectly normal, it is not advisable if you want to be serious about saving money. Maintaining a separate expense account from your savings account, will give you a better sense of control and discipline.
Typically, this can be done by creating a monthly standing instruction to transfer X$ amount of your nett (take home) pay to the savings account. Depending on how big a spender you are (and how much debt you have), I would suggest to save at least 30-35%* of your take home pay.

There are two main benefits of separating your accounts. Firstly, you will not be tempted to spend more than you have budgeted as 'expense'. Secondly, you will be able to enjoy the various interest rate promotions on your savings account. By letting your savings grow, you will enjoy the amplifying effect of compounding! Time, interest rate and savings are the main elements for compounding to work. No matter how tempting it may be, it is important not to dig into your savings account unless necessary.

Interest Rate on Compounding

Example of Savings Accounts (With attractive Interest Rates):

OCBC Bonus+UOB UniplusSCB eSaver

* I personally save about 35% of my take home pay

2) Make Use of Credit Cards

Credit Cards can be a boon or bane. With proper financial discipline, believe it or not, it can help you to save money. Using a credit Card the 'right way' will not just allow you to track your expenses (see Point 5), but also return some decent rewards on your spending (Check out my post on the Best Rebates Cards).

The trick to using Credit Cards is to exercise discipline, pay your bills on time and spend within your means. With a little prudence, you will be surprised at the long term savings of using the right credit cards.

Here are some credit cards which gives me the best cash backs (or rebates):

3) Avoid Expensive Restaurants or Cafes

Eating out, especially at restaurants, can really add to your expenses. After all, unless you have an appetite of a mouse, having a meal at a restaurant for two would easily cost about 40-50$. You can save significantly by either having home cooked meals or eating simple, yet delicious hawker fare. Take a look at some of the best hawker fare in Singapore here.

Of course, i am not advocating being a Grinch. Having the occasional dine-out would certainly not burn a hole in your wallet. Other alternatives to this tip include packing breakfast or lunch to work.

4) Go Local (For Your Daily Coffee Fix)

Local Cuppa

8 Years ago, when i first started work, i drank a cup of Starbucks latte daily. Unfortunately, only when i started to track my expenses, did i realise that this was a major expense!. I was shocked to learn that i had been spending about $1400 per year on coffee! (About 6$ Per Grande Latte).

Ever since then, i adapted my taste buds to the better tasting and cheaper local coffee (AKA Kopi). At 1.30$ (Fun Toast) per cup, it would only cost 312$ per year!. As you can see, the savings are substantial. I had literally saved a 1000$ each year!

I know of friends who would stretch their savings even more by simply drinking the 3-in-1coffee available from their office pantry. This is also an alternative to the Latte, but for the time being, i will be sticking to my favourite coffee from Fun Toast.

5) Track Your Expenses

This tip goes hand-in-hand with spending using your Credit Card. Personally, i use an excel spreadsheet to track my monthly expenses (via the monthly iBanking statements).This gives me a feel of how much i have spent in the month vis-a-vis the amount i have set aside in my expense account. At the end of the month, a dollar not spent, is a dollar saved! :)

There are other alternatives to the excel spreadsheet tracker, like using free iOS or Android apps that works on the same concept. Whichever option you choose, do keep in mind that the motivation for tracking is not to penny pinch, but rather to be aware of your spending. One of the first steps to good financial health is to be aware of your major spending. After all, Money does not simply 'disappear' right ?.

6) Entertainment

It Will Love You Back

Whilst i am not one who goes clubbing or drinking, i do have friends who spend mind-blowingly large amounts of money on drinks every week. I often hear them justify that it is a necessary expense, a form of entertainment and fun.

I am not going to judge. But to be honest, this is where the bulk of your money gets wasted away.

To cut down on this expense would mean to have a change in lifestyle. The first step would be to limit the number of drinking sessions per week. Besides being wallet friendly, cutting down on alcohol consumption does have proven health benefits as well. Your liver will thank you for it ! :)

7) Take Public Transport

Let's face it, one of the biggest pitfalls to saving in Singapore is the ownership of a car. If you haven't already owned a car, then this tip is for you!.With *COEs still at a relative high ($65,889 is Dec. for CAT A), it makes perfect sense to delay buying a car - at least until there is a REAL need for it. Taking public transport (MRT/BUS) will not be most convenient but at least it would allow you to be debt free and put the money that would otherwise be spent on road tax, petrol and insurance into your savings.
* COE - CERTIFICATE OF ENTITLEMENT- A COE represents a right to vehicle ownership and use of the limited road space for 10 years.
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With these 7 little tips and tricks, i hope that you were able to grow your savings. As the saying goes, "A journey of a thousand miles must begin with a single step". Take the first step towards saving and you will be rewarded in due time!